Oil is pushing $70/barrel this week, and no wonder. There's been a steady drip, drip, drip of news pushing prices higher. Weather cold enough to freeze oil solid shut production in Russia. The MMS issued a
report saying a lot of Gulf oil production was still down due to last fall's hurricanes, and 1/6 of it was likely to still be offline by the start of the next hurricane season. One of the top newsletters in the petroleum industry
reported that Kuwait has only half as much oil as as they claim. Kuwait's
response was tentative and unconvincing. Meanwhile, Iran moved their assets from Europe to China, preparing for sanctions, and drastically cut the flow of natural gas to Turkey. Unrest in
Nigeria threatened to cut off production there, and mysterious
explosions in Russia cut off natural gas to Georgia and Armenia.
So, have we reached peak oil? Possibly.
The IEA numbers show that, despite record prices, production during the last quarter of 2005 was lower than in the spring:
Of course, there was more than just geology to blame. There were hurricanes, politics, labor issues, and just plain bad luck. If all goes right, production could rise again.
But I don't think it will. Since when do things always go right? Political problems, inclement weather, labor issues, and bad luck have always been part of the oil business. There's no reason to think any of the current problems will disappear in the future. Indeed, as the supply of petroleum gets tighter, we can expect more political strife in hotspots like Russia, Nigeria, and Iran. And whether the recent increase in hurricanes is caused by global warming or just a natural cycle, next hurricane season is likely to be another active one.
To end on a positive note...WaPo featured this article yesterday:
"Blue" states stake own energy stance
Our federal government may be firmly in the pocket of big business, but "blue" states are finding ways to work around that.